Random Thoughts on the NHL Lockout – November 23, 2012.

The NHL’s rejection of the NHLPA’s CBA proposal came as no surprise, or at least, it shouldn’t for those keeping watch on the negotiations.

Despite the gloomy headlines, however, there are points in the PA’s proposal (as noted in the previous Soapbox) which indicate movement – slowly, reluctantly – toward an agreement.

The two sides now agree “only” $182 million separates them, a narrower gap than when negotiations began back in July.

A 50-50 division of hockey-related revenues remains as inevitable as it was last summer. The players know they cannot back away from that now.

Though the PA leadership will keep pushing for a gradual move toward that division of HRR, and continue to seek protection for its constituents from any post-lockout losses, it appears they’ll eventually accept the league’s plan for immediate implementation.

The players will also have to accept the league’s “make whole” $211 million proposal. It’s nowhere close to the additional $182 million the PA wants, but they’d best move quickly to avail themselves of the league’s offer before it shrinks along with the schedule for this season.

For the NHL to achieve those goals, league commissioner Gary Bettman and his team of negotiators will have to be flexible regarding player contract rights. In their excruciatingly slow way, it seems they’re turning that way.

As ESPN.com’s Pierre LeBrun reported late Wednesday, there were several issues regarding player contracts which the league agreed with the PA, including entry level contracts remaining at 3 years, elimination of re-entry waivers, and a payroll range determined by a percentage over and below the mid-point, rather than by a flat rate.

Just like the previous NHL lockout, the players are making most of the concessions. It’s unfair they should be locked out and squeezed for more revenue and contract rights from a league whose owners make mockeries of every CBA.

But that’s the way the league rolls. Bettman and his negotiators hammer out an owner-friendly labor agreement, then watch helplessly as a number of owners (usually wealthy ones in traditional hockey markets) exploit loopholes and overspend, tilting the agreement in the players favor, and bringing about yet another lockout.

Every NHL CBA have been essentially a set of rules to try and save the owners from themselves. Every one failed. Given that history, and the owners unwillingness to learn from it, the next CBA could ultimately favor the players.

It’s could be different this time, as salaries remain tied to league revenue, which aren’t expected to grow at the same rate (seven percent annually) as under the previous agreement.

That’s as may be, but then again, few predicted or expected league revenue to rise as swiftly as it did over the period of the last CBA, particularly over the past four years, as the American economy struggled through a recession.

Over the course of the next CBA, a Canadian dollar at par with the American greenback, another franchise landing in Canada via expansion or relocation, once-strong markets like Dallas, Colorado and St. Louis could regain their footing, and successfully tapping into new revenue sources could ensure steady revenue growth for the league, in turn ensuring a steadily-increasing salary cap.

That assumes, of course, the NHL doesn’t suffer a significant loss of fan support as a result of this lockout. It’s possible fans might not return in the same numbers as they did following the last lockout, but then again, there were similar concerns during the NHL’s previous labor dispute, yet nothing came of them.

The NHL brain trust believes it survived and thrived following the last lockout because hockey fans are, according to Bettman, the greatest in the world. It’s very likely those great fans will still return, especially if a new CBA is implemented to salvage the remainder of this season.

Sure, some fans have voice their displeasure via social media, threatening never to return. Actions, however, always speak louder than words.

Decertification of the union has been suggested as a means to end this lockout, but I doubt the players, for all their frustration and anger on Wednesday, have reached that stage yet.

“To formally decertify 30 percent of NHLPA members – about 210 players – would have to sign a petition in support of a decertification vote.

That petition would have to be provided to the NLRB. After 45 days the players could vote on decertifying and if a simple majority were in favour the union would be disbanded. Only then would NHL players be able to begin to take legal action against the league.”

Decertification was recently presented as one option to the players by the PA leadership, but they voted to continue negotiations. By decertifying the union, the players would be removing the NHLPA as a bargaining partner with the league, hoping to force the NHL to end the lockout or risk an antitrust lawsuit.

That, however, isn’t a certainty, as a court could rule against the players. Several pundits have also noted decertification would have an adverse effect upon players medical benefits and pensions.

While decertification is among the few leverage moves the PA has at this point, it remains an extreme measure; one which, if the league digs in its heels, could almost guarantee another lost season.

Given how close the two sides are getting to a deal (despite the public posturing), it’s doubtful the union votes to decertify now.

Once this lockout finally ends, however, decertification could be discussed more seriously on the players’ side, especially if a majority believe the union is no longer effective in protecting their rights.

Hamrlik is entitled to his opinion, and because the NHLPA not imposing a “gag order” on the players, is free to publicly voice his complaints of Fehr.

He’s gone through three lockouts during his long career, is coming to the end of his NHL playing days, risks losing the final year of his contract to this lockout, and likely his last shot to play for a Stanley Cup.

Still, Hamrlik did pretty good for himself over the course of his career, earning over $56 million as an NHL player. Can’t help but wonder if he’d be as vocal if he were ten years younger and his prime earning years were still ahead of him.

It’ll be interesting, though, to see if Hamrlik’s complaint is merely a voice in the wilderness, or reflective of a number of other NHL players.

4 Comments

Gennady
on November 24, 2012 at 7:48 am

To talk about owners trying to needing to be saved from themselves ignores the collective action problem: what’s in the interest of all owners collectively is not in the interest of each owner individually. Even if most owner cared more about the league as a whole than they did about winning, they would still realize that if they didn’t sign players to top dollars, other owners would (which would mean the same broken economic system, but also no titles). Every individual-level incentive for the owners favors the players. All it takes is a handful of owners to prioritize winning above all else and player salaries will skyrocket.

Viewed from the collective action problem angle, the salary cap actually does little to reduce league-wide salaries (when combined with a cap floor, the effect might actually be the reverse). The only real tool to reign in wages is to not allow costs to go above a certain percentage of revenues. The current percentage is clearly too high, or so many owners wouldn’t be losing money. In this scenario, even revenue sharing only goes so far: you can’t really have a tax system where the top 20% give up enough income to create parity.

I also find it odd that the players are so strongly against increasing the amount of years until free agency. Think of it like this: the owners have a set amount of money to spend, and that money will be spent one way or the other. If one group of players gets paid less because they’ve yet to reach free agency, then the other group of players will make more. Who are the latter group? The players that are good enough to stick around in the league long enough to achieve free agency. The losers are the players not good enough to stick around. I doubt many players think of themselves as belonging to the losers group (even if they objectively do), which means they should all support lengthening the amount of time until free agency. Furthermore, a side-effect of prolonging free agency is that the disparity between the wages of those who are not free agents and those who are will skyrocket. The inevitable consequence will be for GMs to try to lock in young players as soon as possible, even if it means paying them higher salaries. The only real losers would be rookies and fourth liners, and I doubt they make up a majority of union members.

Captain Ahab
on November 24, 2012 at 6:21 pm

Decertification, if it came about, would basically leave every player, with the assistance of their respective agents, free to hammer out a contract that would or at least should have clauses that address benefits such as medical, dental etc.
That would take away the salary cap and leave the big spenders free to go after anyone and everyone they felt they could afford. Sidney might end up a Maple Leaf and Alex could be a Ranger and the entry draft would basically be a bidding war. While the balance of power might shift for a few years it wouldn’t take too long for it to swing the other way as teams with superstars signed to long term contracts got older and new stars took the stage.
I don’t know if I am against that model as I really haven’t given it too much though except to say that the Stanley Cup final would be great hockey played between probably the two highest salaried teams with the best players of that era. As far as overall fan entertainment this option may provide just that and teams that couldn’t afford to compete would be moved and sold to owners willing to spend to provide their teams with enough guns to fight for the championship.
Decertification just may be the answer and if not at least talking about it will provide plenty of grist for the mill.

gameon63
on November 25, 2012 at 2:34 am

@ Captain Ahab the highest paid team for years was the Rangers and they’ve won exactly one Cup since the NHL was a six team league so money doesn’t necessarily guarantee success. the teams at the lower end of the payroll also had trouble attracting talent which not so coincidentally led to trouble attracting customers so once again you have a few teams that are entertaining and competitive as opposed to now where they at least have parity and the games are entertaining.

“We use third-party advertising companies to serve ads when you visit our Website. These companies may use information (not including your name, address email address or telephone number) about your visits to this and other Web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, http://www.networkadvertising.org/managing/opt_out.asp
“Partner of USA TODAY Sports Digital Properties”